3-D printing: A big hit at CES, but is there a bubble?

One of the biggest hits at the 2014 Consumer Electronics Show is printing.

At the 3-D Systems Corp.
booth, staff members were “printing” chocolate candies and a group dubbed a “3-D band” played music using instruments made with 3-D printers.

At a nearby booth, DWS, an Italy-based 3-D printer manufacturer, showed how its XFab printer assembled a component of a snowboarding mask. The new devices offer a glimpse of a Star Trek future. In fact, it has been compared to the “replicator” of the popular sci-fi TV series, although we’re not exactly talking about a zap-then-flash process of creation. That’s because printing an object can take hours, even days.

“It’s not like the Star Trek replicator, but it’s very exciting technology,” Discern analyst Cindy Shaw told MarketWatch. But the technology is not yet widely recognized outside of tech circles, she added.

3-D printing is the process of creating a physical object based on a three-dimensional model generated by a computer that is then sliced into tiny sections and put it together layer by layer. It is also referred to as additive manufacturing.

The technology has actually been around for decades, but has been used mainly for heavy-duty industrial operations.

But there’s been an explosion of interest in broadening its reach, including for consumer use. One factor is the recent expiration of key 3-D technology patents, Shaw said.

“The most basic patents for one 3-D printing process expired a few years ago, allowing new entrants to introduce very simple printers at much lower price points, which is critical in the consumer market.”

It has become a crowded, increasingly competitive space.

Among the leading players in the space is Stratasys Ltd.
, which owned some of the expired patents.

At CES, companies with such names as Sculpteo and Solidoodle competed for attention.

They showed off a range of items created with a 3-D printing device, from figurines to toys to industrial parts to women’s shoes.

Shaw of Discern says the 3-D printing market has been estimated to total roughly $3 billion in 2013.

Two of the leading 3-D printing companies, Stratasys and 3-D Systems, have seen big jumps in their stock prices.

IDC analyst Crawford Del Prete said 3-D printing “has the power to disrupt industries, in the same way that newspapers and publishing was disrupted by the internet.\”

“Items that have their inherent value in engineering, design and material can now be produced in the after market via a 3-D printer. Think about the number of \’low tech\’ but hard to find item that need to be inventoried and ordered today in the construction, manufacturing, and service/repair business that could be transformed by 3-D printing. Items such as rare parts for out of production items can now be printed right away with a 3-D printer that otherwise would take a long time and lots of expense to source.”

The technology also offers benefits to small businesses, said Roger Kay of Endpoint Technologies Associates.

“It could speed up some aspects of R&D, and it could enable smaller companies that can\’t afford factories with expensive processes to enter into some types of manufacturing,” Kay told MarketWatch.

In fact, Cobb of Stratasys calls it owning “a factory in the box.”

“You look at it and it’s amazing,” he told MarketWatch.

He did took note of the explosion of companies offering 3-D printing systems, and the media attention the technology has received.

“Right now, there’s euphoria,” Cobb said. “It’s an easy industry to get into. Everybody is doing the same thing.”

In fact, Shaw, the Discern analyst, also has warned 3-D printing technology investors that it is too early to determine the long-term winners in 3-D printing.

She said “valuation multiples” for companies including 3-D Systems and Stratasys, “could continue to expand, making them dangerous shorts.” Shaw also took note of what she called “recent large, out-of-pattern insider sales and a looming tax rate increase at 3-D Systems.”

“I’m very excited about the sector but I think it is in the early stages of a bubble,” she told MarketWatch. “The bubble could persist and grow, but at some point I expect it to blow up and that could get pretty ugly.”

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